Mentari Puspadini, CNBC Indonesia
Market
Monday, 04/03/2024 16:37 IWST
Photo: Member of the Board of Commissioners (ADK) of the Deposit Insurance Corporation (LPS) Ex-officio OJK Dian Ediana Rae at the 2024 Financial Services Industry Annual Meeting at the St Regis Hotel, Jakarta, Tuesday, (20/2/2024). (CNBC Indonesia/Muhammad Sabki)
Jakarta, CNBC Indonesia – Member of the Board of Commissioners of the Financial Services Authority (OJK) who supervises banking, Dian Ediana Rae, revealed that the OJK’s steps to reduce the number of BPRs from 1,600 to 1,000 are very possible, one of which is through business combinations (mergers).
This merger effort can be taken by some BPRs which still lack the core capital regulated by the OJK, so that after the merger the capital they have can be sufficient and strong.
However, he did not rule out the possibility of other efforts outside of mergers that BPR would like to take to meet the minimum capital.
“Since 2023, 33 BPRs have decreased, this is quite good progress, and it is hoped that it can continue throughout the next year, this consolidation is on target and can be achieved,” said Dian at the RDK OJK press conference Monday, March 4 2024.
The Future of BPR
Previously, Dian had also clearly revealed the future fate of a number of People’s Economic Banks (BPR) after Law Number 4 of 2023 concerning Development and Strengthening of the Financial Sector (UU PPSK) was officially implemented.
Dian said the PPSK Law provides a mandate that is not much different between commercial banks and BPRs, with BPRs being allowed to list on the stock exchange if they meet the requirements and are allowed to follow the payment system.
“We need extra efforts to prepare BPR to be truly ready to hold the new mandate,” said Dian at the press conference at the Financial Services Industry Annual Meeting (PTIJK) Tuesday (20/2/2024).
Dian said that OJK is focused on ensuring investors are protected if BPR officially enters the capital market, so it needs to strengthen all aspects of governance, human resources (HR) and so on.
It is said that the OJK will issue regulations regarding BPRs which are currently still in the pipeline, including those regarding the closure of BPRs. Dian said there were sufficient reasons for the regulator to reduce the number of BPRs and not just because they wanted to reduce them.
Dian gave an example of implementing the single presence policy rule so that the same individual who owns 10 BPRs will eventually be merged into one BPR with 9 spare offices.
Furthermore, he also mentioned the need for mergers by a number of BPRs which lacked core capital.
“We both know that BPRs have to meet capital requirements so they have to merge, so we are trying to consolidate,” said Dian.
He also said that a number of BPRs are currently facing other problems so that the OJK and related authorities need to make restructuring efforts. However, if the problems at the BPR are fundamental, related to fraud, Dian said that her party must close the BPR so as not to disturb the community’s integrity towards the BPR.
Even though many BPRs have failed since last year until early this year, Dian described a condition of optimism regarding the performance of these small capital banks.
“In general, BPR’s performance is good and continues to grow and can provide services to the MSME community,” explained Dian.
In general, according to Dian, BPR growth is considered positive, but does not deny that there are challenges. Dian believes that the closure of BPR has actually become a positive sentiment regarding the overall health of the industry. This is because it is important to resolve fundamental issues as quickly as possible.
Dian said that this year more BPRs would be closed if they could no longer be saved.
“This year there will be an increase in BPRs being closed if they cannot be saved, but this is in the long term interest so that they can become trusted and reliable institutions,” explained Dian.
Dian emphasized that efforts to revitalize BPRs need to be carried out by OJK systematically, supported by technical assistance for better development of BPRs.
For your information, until the beginning of this year four BPRs had been taken over by LPS and then closed by OJK.
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2024-03-04 09:37:05
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